Moving the Chains
Feb. 5, 2021
You may have seen the news this week that Gannett sold off three newspapers in Oklahoma.
The three papers — the Miami News-Record, the Grove Grand Lake News, and The Delaware County Journal — were purchased by a family-owned newspaper company called Reid Newspapers, which already owns seven other papers and operates two printing operations.
News of a Gannett or other large corporate chain selling off a paper doesn’t come up very often. But expect to hear more about these types of deals in the future.
Sara April, who works for the media M&A firm Dirks, Van Essen & April (which represented Gannett in this deal), discussed this with our NewStart class late last year.
“One thing we’re seeing is some of the larger companies, whether it is a Gannett or a mid-size group, they’re really working on refining their strategies around digital, around publishing cycles,” April told our students. “And some of them are finding that strategy really lends itself better to certain circulation categories. So maybe they’re really focused on their larger papers. So they’re looking to sell their smaller papers where the digital strategy just doesn’t translate as well.”
April added that that certainly rang true for Gannett.
“That’s really a clear strategy change for them,” she said. “The smaller papers don’t fit in with the strategies they’re moving forward with.”
And sure enough, if you look at the three papers sold in this deal, the papers’ digital strategy is, well … pretty much nonexistent. Only two of the three have websites, and there isn’t a consistent social media strategy among the three.
Hopefully putting the three former Gannett properties in local hands will help those publications and the communities they serve.
At the same time, however, this pushes the family-owned newspaper company from seven properties to 10. Which begs the question: when is a newspaper company too big?
Yes, there are efficiencies that can be implemented across all of the properties to streamline operations. But at what point does streamlining get in the way of providing individual communities with the information they need and want? And what happens when the current owners want to sell? If sold together, the price is steep, and that leaves a lot of potential buyers locked out. And that can lead to larger corporations swooping in and getting even bigger. And the cycle continues. I think you see where I’m going here…
Sadly, I don’t have good answers to the questions posed above. If anyone else can point me in the direction of some research on this topic, or if anyone has an opinion on this, I’d love to hear it.
An Experiment Ends
At the opposite end of the spectrum is the news that McClatchy has ended the Compass Experiment.
The company created two hyperlocal news outlets — one in Youngstown, Ohio, and the other in Longmont, Colorado, to see if independent local news websites could become self-sustaining.
They had small editorial teams and small business development departments, and shared resources for strategy, sales, events and more.
A third site was supposed to be added to the mix, but that never materialized.
Mahoning Matters and the Longmont Leader won’t disappear entirely. McClatchy’s news division will run Mahoning and Village Media will take over Longmont. So not everything is lost.
Upon announcing the news, Mandy Jenkins mentioned a very interesting point: “One of the hardest lessons we have learned so far is how difficult it is to efficiently operate local news sites without the benefits of a network. We built our sites to loosely emulate the playbook of our partners at Village Media. We found it challenging to replicate their output, growth, and revenue options without the resources made available through their shared central team and network of websites.”
So what is the right mix of ownership? And what are the right expectations of a media company in today’s day and age? Many questions to ponder this week…